Monday, February 13, 2012

Money & Business

Ethanol explained

By Richard J. Newman
Posted 4/25/06

Most people know that it comes from crops and that it's been around for a while. But advertisements touting ethanol, sponsored by General Motors and others, leave out a lot of the basics. Here's what you need to know:

What is ethanol?

Ethanol is a fuel that comes from agricultural crops such as corn, barley, and wheat—and even from trees and grasses. Unlike fossil fuels, such as petroleum, these are renewable resources. And such crops can be grown in the United States and many other countries. If more cars ran on ethanol, that would, theoretically, reduce American dependence on oil from the Middle East and other unstable regions.

Are there environmental benefits?

Yes. Ethanol produced from corn reduces the emissions that contribute to global warming by as much as 20 percent, compared with gasoline. Ethanol made from trees and grasses can cut those emissions by as much as 80 percent.

How does it work in cars?

Just like gasoline. In fact, ethanol is usually blended with gasoline in various proportions. The form that's now being promoted by General Motors and other automakers is called E85, which is 85 percent ethanol and 15 percent gasoline.

Can any car run on ethanol?

Any car can run on blends of up to 10 percent ethanol, but cars that run on higher blends require a few modifications. Automakers have built about 5 million "flex-fuel" vehicles that can run on E85. Most of them are SUVs and pickups produced by GM, Ford, and Chrysler. The U.S. Department of Energy maintains a list of flex-fuel vehicles. (Select ethanol on the drop-down menu.)

Do flex-fuel vehicles cost more?

Not usually. Automakers have to install a sensor and a few additional components to produce a car that can run on both ethanol and gasoline, which adds about $100 to the cost. But typically they don't pass the cost on to consumers.

Why not?

Automakers get credits from the government for producing flex-fuel vehicles, which helps reduce fines they would otherwise have to pay if they don't meet overall fuel-efficiency standards. Building flex-fuel vehicles saves them money, even if nobody uses ethanol.

Is ethanol cheaper than gasoline?

Sometimes, although prices vary, just as they do with gas. Right now, ethanol is about $2.40 per gallon, while gas is about $2.80 per gallon.

So I'll save money if I use ethanol?

Actually, no. Ethanol contains less energy than gasoline, which means mileage is lower. In city driving, for example, the base model Chevy Silverado pickup truck gets 16 miles per gallon of gasoline, but just 12 miles per gallon of ethanol. During one year of typical driving, it would cost about $250 more to run the truck on ethanol than on gasoline.

So why would I want to use ethanol?

For the greater good of the planet and your conscience. Ethanol produces fewer tailpipe emissions than gasoline. Some people use ethanol because they feel it may help the United States become less dependent on foreign oil. And if ethanol were to become widely used, prices might fall as energy companies increased production.

Where can I buy ethanol?

Not many places. There are only 619 ethanol stations in the United States, an average of only about 12 per state. And many of those are restricted to government or private use. A few states, such as Illinois and Minnesota, have a fair number of ethanol stations, but in most places they are scarce.

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